Just over a year after New Jersey adopted what advocates called the country’s strongest measure to guard patients against the impact of so-called surprise medical bills, a Garden State congressman wants to apply some of the same reforms nationally.
U.S. Rep. Frank Pallone (D-6th) at a public event Monday outlined his bipartisan proposal, which — as well as boosting protections for tens of millions of other Americans — could fill gaps in New Jersey’s own new law. The measure, the “No Surprises Act,” is co-sponsored by U.S. Rep. Greg Walden (R-OR) and was approved last week by the powerful congressional committee Pallone chairs.
Surprise billing generally refers to charges patients get from doctors who are not part of their insurance plan’s network of providers but who practice at hospitals or other facilities that are in-network; supporters of the Pallone plan have said these charges add as much as $1 billion each year to the cost of healthcare in New Jersey.
Pallone’s proposal is one of four pieces of federal legislation to emerge recently in an effort to address healthcare costs by reducing unexpected out-of-network charges. While there are several similarities in the proposals, they offer different strategies to resolve disputes between insurance companies and doctors — something that became a controversial sticking point in the initiative to pass New Jersey’s law, which dragged on nearly a decade.
Under the “No Surprises” bill, patients who received out-of-network charges in an emergency would not be responsible for making up the difference in cost between what an insurance company pays and what the medical provider charged; they would also have new protections against high co-pays and other costs. The measure also creates a payment benchmark system which, if disputes between providers and payers couldn’t be resolved, calls for insurance companies to pay the median in-network rate for the services.
‘Outrageous billing practices’
“The No Surprises Act will shield consumers from these outrageous billing practices while striking a fair balance between the stakeholders who have allowed this clear market failure to persist for decades at the patients’ expense. We look forward to continuing to work together to advance this bill across the finish line for American patients,” Pallone and Walden said in a joint statement last week.
Led by Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA), leaders in the U.S. Senate have been working on a similar plan, which was reviewed by a committee in June and awaits a full vote. Among other things, it would require greater disclosure from providers regarding their services and rates; it would force all providers to join insurance networks in the hospitals where they work. Like Pallone’s proposal, it also calls for disputed bills to be pegged to median in-network rates.
Some healthcare advocates favor these models, in which dispute resolution is grounded in payment history, arguing that such a system also helps to control costs overall. According to an analysis obtained by the New Jersey Health Care Quality Institute, medical costs are rising at double-digit rates in New Jersey and outpacing the annual national increase — 18 percent versus 15 percent.
But certain physicians, including emergency-room doctors — who frequently work as subcontractors outside of some insurance networks, regardless of the hospital’s status with a plan — are concerned these solutions don’t take into consideration the full costs involved with providing care. (Insurance companies reimburse in-network providers at lower rates, so there is some economic incentive not to participate.)
“We don’t want to dumb down our care in the United States,” explained Dr. Russell Harris, an ER physician at Virtua’s Our Lady of Lourdes Medical Center, in Camden. Rate-setting proposals don’t address the cost of staffing an emergency department, he said, especially in rural hospitals or facilities with less traffic where there may be few paying patients that can help generate revenue to fund operations.
Doctors take different tack
Healthcare “is a community resource. It’s an essential service, like your gas or your water,” Harris added. “You’ve got to look at the totality of the situation” and all the costs involved with running a hospital, he said.
Harris, who is part of Envision Healthcare, a national doctors group that has become vocal on surprise-billing issues, favors federal legislation that calls for independent negotiations between providers and payers to resolve disputes, led by a neutral negotiator, as opposed to a benchmark system based on past payments. He and other doctors are supportive of two proposals introduced by lawmakers that also happen to be physicians.
The “Protecting People from Surprise Medical Bills Act” was introduced in late June by U.S. Reps. Phil Roe (R-TN) and Paul Ruiz (D-CA), both doctors. It would prohibit patients from being responsible for charges not paid by insurance companies and would set up an arbitration model similar to one created in New York State in 2015; according to the sponsors, the size of out-of-network bills in that state dropped by a third over the three years that followed.
The “STOP Surprise Medical Bills Act,” unveiled in May by Sen. Bill Cassidy (R-LA), another doctor, would insist patients pay only an in-network rate for emergency services, regardless of where they were provided; this would also apply to lab tests and other ancillary services provided in a crisis according to the sponsors. It also borrows the “baseball-style” arbitration model used in New York to resolve disputes.
For Garden State residents, any of these measures would build on the law signed by Gov. Phil Murphy in June 2018, which also calls for greater disclosure from both insurance companies and medical providers so patients are clear on what their plan covers. Unlike Pallone’s proposal, the state law also established an arbitration model somewhat similar to New York’s.
The state law covers about 30 percent of the insured patients in New Jersey but doesn’t apply to those on public plans — like Medicaid or Medicare, which involve government-negotiated payment rates. It also doesn’t apply to those covered by large companies or other entities that offer larger plans regulated by federal officials. But the federal proposals offered by Pallone and others would, if adopted, apply to these large national plans, which cover nearly half of Garden State residents with insurance.